HEIGHTENING EXISTING INEQUALITIES
As with all public health crises, the economic, social and health impacts of Covid-19 will be gendered both in the labour market and in the home with the pandemic having a disproportionately negative impact on women both at home and at work.
Women are more likely to take on the ‘second shift’ of care at home, particularly if someone in their family is sick or has to be isolated (either young or elderly) and are more likely to be affected by school and nursery closures. For example, it is women who are most likely to be home-schooling children and checking on people within intergenerational family and friend networks.1 With social distancing measures becoming the norm, informal care from friends and / or other family members becomes impossible.
The situation for lone parents can be even more difficult, especially when such options are unavailable.
The Resolution Foundation2 estimate that over one-third of Britain’s five million self-employed people may have to stop working either because they work in sectors most heavily affected by social distancing, or in order to care for children who would have otherwise been at school 3.
Social isolation policies will also increase women and girls’ vulnerability to domestic abuse. 22% of services across the UK report an increase in caseloads since the beginning of the pandemic.4
Women and young people are more likely to be working in sectors hit by social distancing. A recent report by the IFS5 showed that 36% of young women and 25% of young men were working in sectors most affected and / or closed down during the pandemic. These include coffee shops, restaurants, leisure facilities and travel and tourism.
EFFECTS ON WOMEN’S BUSINESSES
All SMEs are facing disruption never seen before and this has serious effects on their markets, supply chains and staffing. Women are more likely to work and be business owners in the sectors most affected by this crisis. UK Women-led businesses in the SME sector with employees were most likely to be operating in health (37%), education (31%), other services (27%), accommodation and food service (22%) and administration and support sectors. (21%)6.
The contribution of women’s enterprises across the UK is not insignificant. A growing importance to the UK economy, women owned, and women led businesses contribute a total of £221bn GVA to the UK economy, representing 13.3% of GVA. Of particular note is the significant provision of employment with women owned and women led businesses providing a total of 23.85% of private sector employ- ment.7 There is a major concern that already existing inequalities in entrepreneurship will be worsened now and in the future beyond the pandemic.
This disruption is going to last months rather than weeks, and some women’s lifetime earnings may not recover. According to the Scottish Widows Women and Retirement Report8 over one-third of self-employed women are already paying nothing into a pension.
Generally, business owners (and the self-employed) are currently saving in private pensions at particularly low levels, with small business owners in Britain having unrealistic pension expectations. Already there is the threat of a retirement ‘time bomb’. During periods of low income and business uncertainty such as now, it is unlikely that this situation will change, and it could worsen.9
Women face specific challenges in business and access to needs-based expert support is critical at this time. Women-led businesses are 44% of the size of male-led businesses on average, and women-owned enterprises represent less than 25% of business in the UK’s five most productive sectors with women owned businesses still dominant in sectors such as health- care, personal services, administration, retail etc.
Women entrepreneurs are also underrepresented in the most productive, high value sectors in the UK.10 As small businesses with limited resources, women-owned businesses are especially vulnerable to the disruption caused by the pandemic. For example, many women owned businesses are home based (without premises) and will have no access to grant support with business losses.
Women-led businesses receive less funding than those headed by men at every stage of their business. Women start their businesses with 53% less capital than men, and also tend to draw more upon private capital (including personal savings) and family finances.
Recent research by the British Business Bank found that female founders receive just 1p in every £1 of venture capital11 and a lack of investment can constrain business growth. As women-owned businesses typically generate lower profits, this crisis is expected to increase financial dependence upon partners or, in the case of lone self-employed women or parents, cause substantial difficulties in providing for themselves or their families.
While financial support measures from government, such as the Business Interruption Loan Scheme, are welcomed at this time, evidence shows that women self-employed/ business owners are relatively more reluctant to take on financial risk, and government schemes such as these might be less attractive or indeed accessible to women at this time.12
SUPPORT AND INFORMATION FOR BUSINESS OWNERS AND THE SELF-EMPLOYED
The self-employed are not a homogenous group – some are highly paid - but the majority have low earnings. The current crisis has shown the crucial need for discussion on better social protection for small businesses and the self-employed.13
Although men are more likely to be self-employed and own businesses than women, women are most likely to be hardest hit during this crisis as a result of the sectors in which they operate, and the typically lower profits generated by women’s businesses.
There is still a lack of clarity surrounding those individuals and their enterprises who are eligible for government support.
As outlined in a recent paper 14while self-employed people of all genders will be eligible for a taxed grant of 80% of their average profits, up to a maximum of £2,500, for many women in particular, given low profits over the preceding period, access to Universal Credit may in fact be more beneficial than the proposed support.
Company directors who access payments via company dividends are not included within the Self-Employed Income Support Scheme. This will leave many directors unable to access an income with women-owned businesses especially vulnerable given the serious impact of Covid-19 on the sectors in which they operate and the smaller profits they generate.
In 2019 research conducted on women’s businesses in Scotland found that 44% of women directors owning private limited companies were paying themselves under £15,000 per annum and 51% were making no pension pro- vision15. For directors who are able to access the furlough scheme, it is not clear if they may continue to work on vital business defence strategies while furloughed.
Information is key during any crisis. Information about incentives such as loans and tax freezes must be made available to all businesses – regardless of size, sector, geography. Women’s Enterprise (WE) is working to help fill the gap for micro and small businesses by providing regular up to date information on its website and social media channels for women’s businesses who may not think that such measures apply to them or know how to access such support.
Businesses throughout the UK are looking at ways to maintain productivity and enable employees to continue working, and more businesses are trying to adapt to more innovative and quite different, working practices to enable them to continue through this crisis. Support is urgently needed to assist these businesses to pivot, re-purpose and execute strategies to help them continue as best they can. WE are working with other organisations to help give more access to critical digital tools and business resilience support.
It will be required to radically rethink how businesses are supported now and in the future. WE are currently engaging with thought leaders and partner organisations to monitor developments, shape collaborative proposals and identify new ways forward during this crisis. However, it remains critical that gender-specific support is provided for women currently in business. Ensuring access to needs-based support will give these enterprises the best chance of success at this time.
The Covid-19 pandemic will lead to a new way of thinking for labour market and economic policy across the UK and globally.
WE supports the objective of maintaining whatever economic activity we can in the UK amidst necessary measures to combat the crisis and its effects.
◗ First and foremost, the UK government and devolved institutions in Scotland, Wales and Northern Ireland must put the right measures in place to protect vulnerable people who will be most affected by this pandemic.
◗ Regulatory confusion around the self-employed has made responses to Covid-19 difficult. An urgent review of the regulatory framework is re- choired to ensure that such uncertainty is avoided for businesses now and in the future. The need for less bureaucracy at times such as these could be essential for the survival of a business.
◗ The promotion of collecting gender disaggregated data is crucial as well as recognition of the gender differences in the effects of the Covid-19 virus both for infection rates (to ensure that, for example, pregnant women may be given accurate information in any future pandemics) and economic impact (to ensure Equality Impact Assessment of support measures) and also to monitor the extent of domestic abuse during such crises.
◗ Sector-specific relief packages - including for seasonal work – should be introduced to sustain businesses.
◗ Women’s enterprises may be particularly negatively impacted by the decision to give loans and not grants to most self-employed, as research16 shows women typically have a higher risk-awareness than men and are more cautious about scaling a business.
◗ Women’s enterprises may also be disadvantaged by the new start-up fund which offers match funded private investment to businesses which must have raised £250,000 privately in the past five years. Research17 shows that women’s access to private investment such as venture capital is significantly restricted with less than 1% of UK venture capital and just 4% of UK deals go- ing to women led businesses.18
◗ As women navigate the double impact of attending to care at home and checking on people within intergenerational family and friend networks, plus dealing with unprecedented disruption as owners of SME businesses, they face heightened exposure and vulnerability to the impacts of the Covid-19 virus. Specific support packages should be made available to ensure women facing such ‘doubled-up’ impacts receive appropriate support and inequalities are not escalated. Recent research has shown a reluctance amongst women entrepreneurs to discuss care responsibilities with banks as they believed this would be perceived negatively 19
◗ Action is needed to extend sick pay to the self-employed and also relax the savings taper and threshold in Universal Credit during this period so as to give more access to social protection for the self-employed20.
◗ Policy issues affecting businesses across reserved and devolved powers of each government in the UK should be monitored for consistency of approach and reliability of guidance to businesses in order to sustain growth across all areas of the UK. This should include robust Equality Impact Assessment of all support policies introduced across the four nations for the self-employed and SMEs as a result of Covid-19.
◗ For further information: www.wescotland.co.uk/covid-19
2 https://www.resolutionfoundation.org/our-work/ coronavirus/
3 On 4 April 2020, the Government extended its furlough scheme to cover employees who cannot work because they are caring for children. However, it does not cover the self-employed, or people who started work or changed employers after 28 February 2020.
4 https://safelives.org.uk/news-views/domes- tic-abuse-and-covid-19
5 Sector shutdowns during the coronavirus crisis: which workers are most exposed? IFS Briefing Note BN278 https://www.ifs.org.uk/uploads/BN278-Sector-shut- downs-during-the-coronavirus-crisis.pdf
6 Small Business Survey (employers) 2019. BEIS. https://www.gov.uk/government/organisations/department-for-business-energy-and-industrial-strategy
7 Supporting Women’s Enterprise in the UK: The Women’s Enterprise Scotland, University of Portsmouth www.fsb.co.uk
8 ‘Women and Retirement 2019’. Scottish Widows (2019) https://www.scottishwidows.co.uk/about_us/ media_centre/reports_women.html
9 ‘Pensions and Small Business – Ticking Time Bomb or Hidden Treasure‘. Forum of Private Business (2017) 10 The Alison Rose Review of Female Entrepreneurship (2019) https://www.gov.uk/government/publications/ the-alison-rose-review-of-female-entrepreneurship
11 UK VC and Female Founders report, British Business Bank (2019)
12 Covid 19: Critique and Proposals to Develop More Comprehensive and Inclusive Support for the Self-Employed ERC Research Report (April 2020) www.enterpriseresearch.ac.uk
13 ‘Who are business owners and what are they doing?’ Jonathan Cribb, Helen Miller, Thomas Pope. Institute for Fiscal Studies (2019) http://www.ifs.org.uk
14 Gender Enterprise Network ISBE https://isbegen. wordpress.com/2020/03/27/stay-home-and-work/
15 Survey of Women’s Businesses in Scotland 2019. Women’s Enterprise Scotland. www.wescotland.co.uk
16 The Alison Rose Review of Female Entrepreneurship (2019) https://www.gov.uk/government/publications/ the-alison-rose-review-of-female-entrepreneurship
17 UK VC and Female Founders report, British Business Bank (2019)
18 British Business Bank, BVCA and Diversity VC. UK VC & Female Founders report. February 2019
19 The Alison Rose Review of Female Entrepreneurship Progress Report (2020) https://www.natwestbusinesshub.com/content/rosereview
20 Covid 19: Critique and Proposals to Develop
More Comprehensive and Inclusive Support for the Self-Employed ERC Research Report (April 2020) www.enterpriseresearch.ac.uk